Auditors warned of a culture of “extravagance” at the heart of the E-ACT group – the second-largest provider of academies in England – that led to hundreds of thousands of pounds being wasted.

In a damning report, a Government quango found widespread examples of “lax” controls from senior managers and the use public of funds that “stretched the concept of propriety and value for money”.

The disclosure comes just two weeks after Sir Bruce Liddington, the chain’s director-general, who earned around £300,000 in 2010-11, resigned over the financial probe.

It will be seen as embarrassing blow to the Government which has encouraged the establishment of large-scale chains to manage academies – state-funded schools run independent of local council control.

Last year, a separate investigation found the head of an academy chain in Lincolnshire spent £45,000 on a luxury flat refurbishment and used company credit cards to buy hi-tech gadgets, DVDs and sex games.

In the latest case, the Education Funding Agency launched a probe into E-ACT after concerns were raised about spending levels by the chain, which runs 35 schools.

It emerged that officials from the Department for Education had investigated the organisation in 2010 over claims its directors were living the “high life” but it proved inconclusive after E-ACT provided “satisfactory assurances”.

But the fresh report – leaked to the Times Educational Supplement – found the organisation had “not acted swiftly” to address previous failings. Although there was no evidence of fraud, the study revealed:

· ”Irregularities” around the awarding of £393,000 worth of contracts and consultancy fees;

· £15,990 was spent on an annual “strategy conference” in April 2012 at a business centre in Hertfordshire, including a meal and drinks bill of £1,000, that represented an “extravagant use of public funds”;

· Monthly dinners at the Reform Club in central London and – in one case – the submission of a £213 alcohol bill;

· A £5,406 bill to use the four-star Bloomsbury Hotel in London for a “governance workshop and board meeting”, including an evening meal and overnight stay for some staff;

· The use of first-class rail travel in contravention of the organisation’s rules and a business flight to Dubai.

The report said: “Expenses claims and use of corporate credit cards indicate a culture involving prestige venues, large drinks bills, business lunches and first-class travel all funded by public money.

It said that card payments by senior managers “occasionally stretched the concept of propriety and value for money”, adding: “Controls have been lax and some payments have tended to extravagance. However, we found no evidence of fraud.”

In a statement, Ann Limb, E-ACT’s new chairwoman, said the organisation had “taken swift action” to address concerns raised in the latest report.

Sir Bruce and the group’s finance director have left the organisation, monthly internal finance reports are being prepared, new rules on maximum expenditure have been introduced and company credit cards have been banned from the head office, she said.

A source close to the academies programme added: “The bad apples have been expunged. E-ACT can now focus on delivering a fantastic education for the children in their academies.”

A Department for Education spokesman said: “Academies cannot hide from their responsibilities. All their accounts must be externally audited and they are held to account by the Education Funding Agency, so any issues of impropriety are immediately investigated.

“This is exactly why the [agency] has written to E-ACT requiring them to take swift action to improve financial management, control and governance.”